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    What’s Next for Online Piracy

    From SOPA, PIPA and OPEN – the Stop Online Piracy Act, Protect IP Act in the Senate and Online Protection and Enforcement of Digital Trade Act – to the take down of file sharing giant MegaUpload, online piracy is all the buzz right now. As internet protestors made a stand on January 18th to keep the Internet uncensored, we took a minute to reflect on what could happen if any of these legislations did pass. What are the impacts they could have on enterprise social networking, Software as a Service (SaaS)/Cloud companies, and how could it restrain the current growth of international business?

    SOPA, which has been dropped for the time being, represents a fundamental change in the way the Internet works today and could undermine all SaaS companies and working in the Enterprise 2.0 space. This poses a great threat to many enterprise social networking providers, such as Socialtext who have shared hosting with their customers. Additionally, if this bill was passed, it could have broken-down the advancements made in international business if other countries followed suit and disabled the ability to provide services globally.

    At Socialtext, customers use our technology to interact and share socially across the enterprise, from marketing to customer support, engineering, research and more. We were the first company to deliver enterprise social software and are focused on delivering a SaaS platform that enables social collaboration, allowing employees to share knowledge with their colleagues and teams. In addition to sharing internal knowledge and documents, customers also share information off the web, which can pose a problem if the sites and/or content shared comes from a site deemed infringed. In result, customers (especially those using extranets) would have to self-police themselves or face substantial penalties.

    After strong protests and, according to PC World, $4.5 million people signing the Google anti-SOPA and PIPA petition, the bill is currently being assessed and reworked. So, what does the future hold for Internet security? Will OPEN gain more ground than its predecessors, SOPA and PIPA? Only time will tell as SOPA sponsor and Chair of the House Judiciary Committee Lamar Smith (R-Tex.) continues to work on getting an antipiracy legislation passed.

    For more thoughts on this please check out my special guest piece, “SOPA: Dead but Not Forgotten” on TMCnet.com and featured interview on Technorati.

    How We’re Leveraging Scale to Improve Socialtext

    At Socialtext, we’re proud to offer a flexible software as a service (SaaS) business model that delivers the enterprise social tools people need to perform their best work — but with the security, flexibility and integration required by IT to make them a strategic asset inside their organization.

    As business models in the Enterprise 2.0 world evolve, we’ve examined how we can streamline our sales, trial and provisioning process to get companies up and running even faster. The launch of the Socialtext Virtual Appliance — a VMware image that contains the most current version of Socialtext — created a huge opportunity for us to move in that direction.

    So today, we’re announcing two new offerings that build on that vision.

    1. The Virtual Appliance Trial

    Launching in May, prospective Socialtext customers can select, try, evaluate and buy their Socialtext solution by downloading the Virtual Appliance directly from Socialtext.com. This delivers IT a full private instance of the Socialtext platform, without encountering any of the friction that hardware-supported, traditional, behind-the-firewall deployments usually entail. It also gives companies the ability to host their data as they try Socialtext, something we know the market craves as some freemium models hold IT captive to buy their data back from vendors.

    2. Expanding channel partner programs

    Today we’re also announcing the ability of a new distribution channel via our partner program. In addition to our referral, reseller and integrator partners, we’ll be rolling out the ability to distribute Socialtext via a network of OEM Partners. In doing so, we’re making it easier for traditional application vendors to make Socialtext a social layer that spans the entire enterprise. To learn more, please e-mail partners@socialtext.com.

    As we are now in a position to insert scale and leverage into our business model better than ever before, we have reorganized our resources in the way to best capitalize on these opportunities. We look forward to passing the benefits of scale and leverage on to our customers, and to the exciting work in the months ahead.

    SaaS Appliances Bring the Cloud to the Enterprise

    Software Appliances were initially created for high performance network and security infrastructure with lower administration costs. Over time the Appliance model moved up the stack from email appliances to a diverse set of business applications. This trend has continued in parallel to the rise of SaaS and Cloud Computing. SaaS Appliances provide pre-configured, self-contained applications with on-premises deployment that can be automatically updated and upgraded. While the Cloud is the center of attention these days, SaaS Appliances have been quietly evolving up the stack while adapting the best of web-oriented architecture for clouds inside companies.

    Whenever there are security or regulatory constraints that demand on-premises deployment, SaaS Appliances can deliver where the Cloud cannot. While several years from now these constraints may change, this is the reality for many enterprises and government agencies. Any SaaS vendor who does deliver both Cloud and SaaS Appliance deployment models from a single image of their software is simply reducing their total addressable market.

    Compared to traditional on-premises software, SaaS Appliances provide rapid deployment that shortens technical pilots, fast upgrade cycles without degrading service level and a lower Total Cost of Ownership (TCO).

    Combined with subscription business models that let the enterprise right-size the deployment, the ability to deliver or turn on additional applications (e.g. upgrading a Microblogging Appliance to a full Social Software Appliance) provide the flexibility and fit for adoption concurrent with business value.

    Traditional enterprise applications such as CRM or ERP will move to the Cloud, but not just because a customer chooses the Cloud over traditional deployment. The Cloud will come to them. For example, I can’t wait for a customer to migrate apps and users to the Cloud so we can enable the integrated value proposition of Social Software working across organization and application silos.

    Selling a SaaS Appliance

    Socialtext is hiring sales people right now. As I conduct the interviews, I’m impressed by smart and highly skilled candidates that have dropped by our headquarters in Palo Alto.

    In each conversation, one question inevitably comes up: “It was my understanding that Socialtext is a SaaS company, but you guys deploy on an appliance. Isn’t that a little weird?”

    The truth is, our customers love our managed appliance, and it’s actually quite in line with our SaaS business model. The appliance brings customers the best of both worlds. It provides them with a system that is easy to set up and implement with nearly zero management. At the same time, the data is secure, onsite and adheres to the company’s internal data requirements.

    Although Socialtext has strict requirements around our data center that runs our hosted service, for some companies, the complex requirements of their industry might require them to run our software on site, and we’re happy to provide that option.

    The conversation typically goes like this:

    Customer – I can put it in behind my firewall, control when updates are installed and not have to worry about learning languages or procuring a bunch of hardware?’
    Me – Yep
    Customer – And it’s secure?
    Me – Yep
    Customer – How many heads do I have to allocate to manage it?
    Me – About 15 – 30 minutes a month to make the calls for the updates.
    Customer – And it hooks into LDAP & SharePoint?
    Me – Sure does.
    Customer – Where do I sign?

    Of course, it isn’t always quite that easy, but I’m confident the Socialtext Managed Appliance gives us a great competitive advantage.

    And we see it as an asset in the wide array of industries that purchase our enterprise social software. Financial services firms love it because it aligns with their compliance requirements. Healthcare organizations jump all over it because all the data is stored on site. Media companies get it because it is simple to deploy and easy to access by all employees. Even the US Federal Government uses it because it exceeds their security requirements. Most importantly, all of our customers choose Socialtext because our social applications are flexible to the way their business works. The appliance makes this easier.

    Is the idea of an on-premise, SaaS solution weird? Not at all. Google, Barracuda and many others have been doing it for years. Is it unique to Socialtext for social software? Most definitely.

    By the way, if you know any good candidates, send them my way.

    Socialtext Teams Up with Cloud Computing Vendors to Promote Benefits of SaaS

    Last week, Socialtext CEO Eugene Lee teamed up with our friends at Box.net and other cloud computing vendors to promote the benefits of Software as a Service (SaaS). The video — entitled “Will You Choose the Cloud?” — highlights the many advantages of SaaS that we hear from our customers everyday, including:

    • Fast innovation cycles; upgrades to software happen in days or weeks — not years
    • Accessing your business applications on any device
    • Reducing friction to collaborate with customers and partners

    At Socialtext, we look at “the cloud” rather pragmatically. While we have a hosted service that runs Socialtext in our data centers for many of our customers, we also offer a SaaS appliance that can be deployed either behind a customer’s firewall or in our data center. The Socialtext appliance provides all the benefits of SaaS because we patch upgrades remotely, but customers get the added security of having everything located inside their own corporate firewalls. Regardless of the deployment option customers choose, they pay for the software on a subscription basis.

    From our perspective, SaaS encourages strong alignment between vendors and their customers. Since we have to earn our customers’ business fresh every year, we must ensure that we’re delivering software that helps them solve critical business challenges and respond to new opportunities. With modular software, customers have the option to introduce (and pay for) one capability at a time. For example, many customers choose to deploy microblogging first, then introduce the deeper value of other social software products later.

    We encourage you to watch the video and check out the website ichoosethecloud.com to see the benefits companies get when they embrace SaaS.

    SaaS Forces Alignment between Customers’ Success and Socialtext’s Success

    During the past month, I’ve spoken with a lot of analysts, journalists, bloggers, customers, and prospects about the great momentum in our business and explaining the underlying reasons for our success. One topic I always emphasize is Socialtext’s business model, which is all SaaS (Software as a Service). In the software industry, the term SaaS can mean many different things. To me, it means that all our contracts with customers are on a subscription (usually 12 month term) basis.

    Many folks (investors especially) like the SaaS model — and its “gift that keeps on giving” annuity feature, but that’s only true when renewal and retention rates are sufficiently high to cover the costs of customer acquisition and support. For Socialtext, the good news is that we’ve been in business long enough to be in what I call the “SaaS economic leverage zone.” What I mean by that is our renewal revenues are a healthy chunk of our ongoing business, and our renewal rates have increased by an order of magnitude during the past two years. I’m really proud of this achievement. It can be attributed to the combination of major product enhancements, coupled with more pedestrian operational improvements, including faster contract-to-launch times , improved coordination with customers pre-launch (often pre-contract), and more intimate partnerships with our customers throughout their lifecycle.

    Adhering to this this SaaS model has great benefits for us and our customers. Here are some of the benefits we have seen and what about the Socialtext offering that’s different than other vendors out there:

    SaaS forces alignment

    What I love the most about this business model is that it completely aligns my team with the goals of our customers. If our customers don’t realize the value from our platform that they were expecting, then they just won’t renew. If they do find value, they renew. If they achieve results beyond their expectations, they’ll increase their Socialtext footprint. The best testament to our progress on this front is that our business from customer expansions tripled in Q3 and Q4 of 2009 vs. our previous average.

    Socialtext’s appliance is secure on-premise SaaS

    For Socialtext, “SaaS” does not have to mean “cloud-based solution.” While we offer a shared hosted service like other SaaS vendors, we also provide our customers the option of deploying via an on-premises Socialtext appliance. This secure, behind-the-firewall, 1U rackable box is easily integrated into the customer’s existing datacenter (and enterprise directories, backup, etc.). It comes pre-configured, so there is nothing to download, install, or configure. Our Services team works with the customer to schedule monthly updates which are pushed down to the appliance, requiring no time or cost of administration on the customer side. Finally, for those customers who want the privacy of a single-tenant service, but don’t (yet) have a datacenter of their own, we also offer a “hosted appliance” option. It provides all the benefits of the appliance model combined with the convenience of having the server hosted by Socialtext.

    It’s all about customer success and business value

    The official job titles for our team members that work with customers during their deployment is “Customer Success Manage.” This isn’t just fancy business card blather – these people are measured and goaled on pretty much the same metrics that our customers use to measure their deployment success – timeframes, usage metrics, and most importantly, business value. Our software is fully instrumented to measure a wide range of user activity, and these reports are shared (assuming the customer gives us access) between the customer team and our team during our periodic scheduled update calls.

    By contrast, vendors who continue to follow the perpetual license sales model will continue to be motivated to sell you as many seats as possible up front, which I believe is why there are so many Enterprise 2.0 Adoption “support groups” out there, and why that topic dominates many of the industry conferences and forums.

    Customer-Driven Innovation

    I’ve often used the line “the best ideas come from your smartest customers – are you organized to listen?” A great deal of our product enhancements and innovations have come from feedback and suggestions from our customers – not just in the form of feature requests on a one-off basis, but rather in the context of an ongoing relationship we are proud to build with them. One example is the way Socialtext’s new groups capability works the same way whether you are using groups defined in your corporate LDAP/Active Directory or setting up ad hoc groups for cross-functional teams.

    We only succeed if you do

    An amazing amount has been written about the SaaS model and why it’s good for customers. These include lower up front costs, better matching your expenses with adoption and deployment, reduced risk, less capital needs to self-host software, and lower IT headcount requirements (to name a few). But I think the biggest advantage is that your vendor only succeeds if you do.

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    Business is Conducted by People, not Users

    One of the more unfortunate words that prevails in the software industry is “user.” “User” marginalizes the importance of people, and subconsciously implies that we should simply use the software in the way it’s presented to us without question. It makes it seem as if people should adapt to a vendor’s terminology, data model, and workflow. In reality, it should be the other way around: Software should enable people to communicate and collaborate with each other, share knowledge, make informed decisions, and get our jobs done faster and more efficiently than ever before, in a model that makes sense to them.

    I’ve only found two industries who describe their customers as “users”. One is high tech, and the other is drug dealers.

    We have even evolved highly specialized disciplines whose monikers involve the word “user” – “user interface” or “user experience.” Worse, the science of “user interface” has historically been called “human factors” – where we’re now describing “humans” as organic life form alternatives to the preferably predictable and “error-proof” silicon powering the machines we force users to adapt to.

    In reality, business is conducted by people, not users. People introduce themselves by job title or organizational affiliation. They have passions and expertise, and like to share knowledge with the teams and groups they’re on. Almost no one describes themselves as “an Oracle user”.,

    Socialtext has always focused on reaching out to business people first – which fits hand in glove with our all-SaaS business model (as opposed to selling big perpetual license deals to IT who then try to stimulate adoption with users). Our whole company is aligned around the priority of enabling our customers to achieve business value, not just adoption. That starts first with designing and delivering functionality that enables customers to answer more substantial questions (such as “who knows what” or “who knows who knows what”, not just “who knows who”). Our entire sales and marketing methodology emphasizes the importance of identifying business champions (see Michael Idinopulos’ excellent post “How to Find Enterprise 2.0 Champions”), and partnering with our customers throughout their implementation to ensure they are realizing business results. We continually adapt and innovate product enhancements based on their feedback.

    Business people feel proud of business results they achieve by being part of something bigger than them – and usually by being part of a team that made it happen. Software should adapt to these people and their needs.

    About This Blog

    Weblog on gaining business results from social software.

    On this blog, Socialtext staffers and customers explore how companies can gain the most business value from their use of enterprise social software, including microblogging, social networking, filtered activity streams, widget-based dashboards, blogs and wikis.


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